Insurance, probably the last thing on your mind when letting your holiday cottage – that is until you rely on it. Earlier this month the UK was hit by storms and a tidal surge, 2010 saw the coldest December on record with 103,000 burst pipe claims. Forest fires, earthquakes and flooding are just a few risks that overseas properties face.
Insurance protects you against the unexpected, but not all policies provide the same levels of cover. Hopefully these tips will help you ensure your holiday home is protected.
The cover you need and what to check the policy small print for:
1. Buildings and contents insurance
Just like your main residence insurance, a typical holiday home buildings insurance policy will cover the structure of your property against loss or damage from common perils such as fire, storm and flooding.
Contents insurance covers items in your holiday home (e.g. furniture and electrical items) for loss or damage. Make sure they are insured on a new for old replacement basis.
What to check:
Make sure your sums insured are up to date if you make any improvements to the buildings and/or contents. Under-insurance could mean your claim will be reduced, which can be significant, especially for structural damage.
Check if your policy covers accidental damage to contents by guests e.g. spillages/breakages and the rare but costly consequences of malicious damage.
2. Liability cover
Slips and trips, hot tubs and swimming pools – there is always a risk when letting that guests could incur an injury whilst at your property. Legal fees alone can run into 5 figures when dealing with such claims. Public liability insurance covers court cost and associated legal fees in defending claims.
What to check:
Some policies, especially those offered by foreign insurers, provide low levels of cover and often don’t cover public liability when letting. A £3 million indemnity should be enough.
3. Security requirements
What security measures does your insurer require? These typically include specific door and window locks, shutters or grilles for overseas properties and alarms. Failure to meet the security terms that you have agreed to can invalidate theft cover.
What to check:
Check if you are covered for theft by ‘non-forced’ entry, if for example a burglar entered via an open window or unlocked door would you be covered? Are you covered if you use a keysafe?
4. Loss of rent
Nobody wants to be out of pocked should you have to cancel a booking, not you and certainly not your guests. Most policies cover loss of rental income should your holiday let become uninhabitable. However, this is typically following an insured event; such as a fire or flood at the property and not ‘maintenance’ related incidents.
What to check:
Note that most policies cover loss of pre-booked rental income, that being future confirmed bookings – not projected bookings.
5. Are you dog friendly?
It’s reported that 1 in 5 holidaymakers take a dog with them on holiday, being dog friendly can increase your bookings. However, when left in unfamiliar surroundings stressed dogs can create havoc at your property by soiling and chewing.
What to check:
Some holiday home insurers don’t cover damage by pets so check your policy.
6. Are you covered when your property is unoccupied?
There is no doubt that your holiday home is at risk when it’s unoccupied, especially during winter. Our claims data revealed that the average burst pipe claim is £14,000 so it’s essential that you take steps to prevent them. Most policies insist that you turn off the water and/or maintain a minimum temperature during the winter when your property is empty. A sensible precaution considering that by simply turning the water off can reduce claims to £1500.
What to check:
For any winter unoccupancy warranties that apply to your policy. When are they in force? Do you have to drain the water system down or just turn the water off? Do you have to inspect your property regularly?
Insurance doesn’t cover every eventuality. However, policies offer different levels of cover and you typically get what you pay for. Check for major exclusions or warranties in the policy wording. Ask other holiday rental owners if they have had successful claims paid. Check for reviews on the insurer and ask for clarification in writing if you have any queries. Most insurers will be more than happy to discuss your queries.
This advice is from Phil Schofield who works for Schofields Insurance and is a holiday rental owner. You can follow him on twitter @schofields where he shares holiday letting advice
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